Real Estate Market 3rd Quarter | 2019 Review VPI Residential VPI Residential Real Capital Values Rental Values Estate 70.9 73.8 Performance (Base Q1 2016=100) (Base Q1 2016=100) -12.6% -9.2% Y-o-Y Y-o-Y

Market Intelligence. VPI Simplified. ValuStrat Price Index

Source: ValuStrat

Key Indicators

Source: ValuStrat, REIDIN, DCTAD

Apartment Asking Villa Asking Apartment Villa Sales Price Sales Price Asking Rents Asking Rents 13,219 10,288 111,500 190,300 AED/sq m AED/sq m 2 Bedrooms (AED p.a.) 4 Bedrooms (AED p.a.) -0.8% -7.4% -0.3% -5.4% Q-o-Q Q-o-Q Q-o-Q Q-o-Q

Hotel Average Hotel Office Asking Office Asking Room Rate Occupancy Sales Price Rents 374 74% 10,620 836 (AED) Jan-Jun Jan-Jun AED/sq m AED/sq m p.a. 10.9% -0.4% -3.9% 2.8% Y-o-Y Y-o-Y Q-o-Q Q-o-Q

Increase Stable Decline

1 | Real Estate Market 3rd Quarter 2019 Review VPI ValuStrat Price Index

Residential

Capital and rental values for Abu VPI - Abu Dhabi Residential Capital Values Dhabi’s residential investment zones 5 Villa and 5 Apartment Locations are tracked by the valuation based [Base: Q1 2016=100] and weighted ValuStrat Price Index. The third quarter VPI - Residential Capital Values declined 2.4% 120 100.0 quarterly to 70.9 points, registering a 96.4 95.4 94.1 100 92.4 90.3 slower rate of decline than the past 4 88.5 87.1 85.5 quarters. 83.8 81.1 77.6 75.1 80 72.7 70.9 Abu Dhabi capital values were 12.6% lower than the third quarter last year, 60 29.1% lower than Q1 2016, the base of the VPI. The weighted average 40 residential value this quarter was AED 9,505 per sq m (AED 883 per sq 20 ft), apartments stood at AED 10,044 per sq m (AED 977 per sq ft), and 0 villas at AED 7,083 per sq m (AED 658 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 per sq ft). 2016 2017 2018 2019

Source: ValuStrat All ten locations monitored by the VPI witnessed single-digit quarterly declines in capital values of less than 4%. Apartments in saw marginal quarterly dips of less than VPI - Abu Dhabi Residential Rental Values 1%, while villas in Mohamed Bin 5 Villa and 5 Apartment Locations saw no change since Q2. [Base: Q1 2016=100] On an annual basis, typical apartment units located in and Al 120 Reef saw 15.4% declines, as well as 100.0 98 villas in Hydra Village with 16.2% 96.8 100 93.7 92.3 annual drop. 88.8 88.7 85.2 82.9 82.2 81.3 78.9 77.2 80 75.6 73.8 The third quarter VPI - Residential Rental Values declined 2.4% quarterly 60 and 9.2% annually to 73.8 points. Abu Dhabi’s gross yields averaged 7.4%, 40 with apartments at 7.7% and villas at 6.6%. 20

0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2016 2017 2018 2019

Source: ValuStrat

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www.valustrat.com | 2 Macro-Economic Snapshot

• Latest GDP at current price estimates from Abu Dhabi Population Statistics Centre Abu Dhabi (SCAD) recorded 3.3% YoY growth to AED 226 billion • Oil GDP grew 11.6% YoY and contributed 2,023,600 39.8% of Abu Dhabi’s overall GDP, equivalent 2018E 1,912,300 to AED 89.9 billion 2017E • The value of exports passing through Abu Dhabi’s seaports grew 14.8% YoY to AED 27.6 1,807,000 billion. However, value of imports declined 2016 7.7% YoY to AED 24.2 billion, as per latest 1,720,000 SCAD announcement 2015 • The UAE Central Bank lowered its interest rate mirroring US Federal Reserve 25 basis 1,640,000 point cuts for the second time this year 2014 • Department of Transport Abu Dhabi and Integrated Transport Centre announced toll 1,537,000 gate system to commence from 1st January 2013 2020, toll charges would cost AED 2 minimum • OPEC+ meeting held in the city discussed possible oil production cut as crude hovered in the low USD 60 per barrel • Latest data from Abu Dhabi Department of Economic Development (ADDED) announced 47% YoY growth in the number of economic licenses issued in the capital • Abu Dhabi International Airport handled 4.5 million passengers during the summer Source: Statistics Centre Abu Dhabi, ValuStrat months

Consumer Price Index vs. Housing Index • As of August 2019, the January 2016 – YTD annual inflation rate fell 1.2% and stabilised 125 0.4% MoM • Housing and Utilities 120 Expenses dropped 115 3.6% YoY and no change was recorded 110 when compared to 105 previous month

100

95 Jul Jul Jul Jul Oct Oct Oct Apr Apr Apr Apr Jan Jan Jan Jan Jun Jun Jun Jun Feb Feb Feb Feb Sep Sep Sep Dec Dec Dec Nov Nov Nov Aug Aug Aug Aug Mar Mar Mar Mar May May May May

2016 2017 2018 2019

General Index (2014=100) Housing, Water, Electricity, Gas and Other Fuels

Source: Statistics Centre Abu Dhabi

3 | Abu Dhabi Real Estate Market 3rd Quarter 2019 Review Residential Supply

• Abu Dhabi City with an estimated 233,986 Abu Dhabi Residential Supply residential homes stock 2016-2020 (’000 UNITS) • So far this year, an estimated total of 1,000 villas and 733 apartments were completed, which is 31% of the projected 5,590 units for 2019 located primarily in , and Abu Dhabi Island

2020E • Key expected deliveries this year include 1,450 0.3 3.1 240 apartments in Al Marayah Island, Al Reem 2019E 1.2 4.4 234 Island with 1,413 apartments, Saadiyat Island 2018 with 763 apartments and 83 villas, and Nareel 234 Island with 148 villas 2017 230 2016 • 2020 is expected to add 1,766 apartments in Al 226 Reem Island, 600 in , and 283 villas in Current Stock New Apartments* New Villas*

*May be subject to significant downward adjustment Source: Urban Planning Council, REIDIN, MEED Projects, ValuStrat

Residential Sales

• The average citywide residential asking price Residential Asking Prices per square foot declined 2.7% QoQ and fell 6.4% when compared to last year -7.6% -6.4% Last 2 Years Last Year • The average asking price for ready apartments stood at AED 13,219 per sq m (AED 1,228 per sq ft) displaying a marginal dip of 0.8% QoQ, and 5.1% lower than the same period last year

• For ready villas, the average asking price was AED 10,288 per sq m (AED 957 per sq ft) -3.9% -2.7% indicating prices are 7.4% below the previous Last 6 Months Last Quarter quarter and 9.5% lower than a year ago

Source: REIDIN, ValuStrat * Ready properties located within investment areas

www.valustrat.com | 4 Residential Rents

• Overall average residential asking rents fell Residential Asking Rents 9.2% when compared to the same period last year -16.7% -9.2% • On a quarterly basis, citywide average asking Last 2 Years Last Year rents fell 2.4% • Average apartment asking rents in Abu Dhabi City dropped 7.6% YoY but remained stable since Q2 • Citywide villa asking rents declined 11.6% YoY and 5.4% QoQ • Asking rents for villas in Saadiyat Island were 2.2% higher than Q2, while marginal or no -4.3% -2.4% change in asking rents were recorded for Last 6 Months Last Quarter villas in Al Reef and Raha Beach as well as apartments in Al Muneera, Al Bandar, Saadiyat Island and Al Reem. However, villas in MBZ City witnessed steeper quarterly fall in rents of 7.1% • The average occupancy rate among a sample Source: REIDIN, ValuStrat of more than 60,000 units stood at 79.6% * Ready properties located within investment areas

Average Asking Rents (’000 AED per annum) and Quarterly Change (%)

Apartments Villas

56 87 Al Reef 72 -2.3% MBZ City 130 -7.1% 88 135

65 107 Al Reem 90 -0.7% Al Reef 135 -0.5% 130 145

83 154 Al Muneera 121 0.0% 172 -0.2% 155 220

100 302 Al Bandar 135 0.7% Saadiyat 324 2.2% 205 450

One Bedroom Three Bedroom Three Bedroom Five Bedroom Two Bedroom Quarterly Change (%) Four Bedroom Quarterly Change (%)

Source: REIDIN, ValuStrat Source: REIDIN, ValuStrat

5 | Abu Dhabi Real Estate Market 3rd Quarter 2019 Review Office Supply

• An estimated 74,409 sq m (800,931 sq ft) Abu Dhabi City Office Supply GLA has been completed so far in 2019, 2016-2020 equivalent to 31% of projected supply for (Million sq m GLA) this year

• The remaining 69% or 165,269 sq m (1.78 million sq ft) GLA is expected to be completed before year end 0.11 0.24 • Eclipse Twin Towers with 51,590 sq m 3.82 3.58 (555,294 sq ft) GLA, Reem Tower 1 with 3.58 3.51 27,650 sq m (297,614 sq ft) GLA and Al Mansouri Commercial Tower having 3.10 14,364 sq m (154,608 sq ft) GLA which were initially reported to finish construction early this year are now slated for completion by end of 2019

• The under-construction Parsons regional headquarters in Capital District with approximately 29,400 sq m (316,459 2016 2017 2018 2019E 2020E sq ft) GLA expected completion date has been moved to second quarter 2020 Existing Stock Expected Supply Source: REIDIN, MEED Projects, ValuStrat • WeWork announced to open its first UAE co-working facility at Abu Dhabi’s Hub71

Office Rents

• Office asking rents in primary commercial Office Asking Rents districts were up 2.8% QoQ, however, on an annual basis were down 11.6% -13.1% -11.6% Last 2 Years Last Year • The average citywide asking rent for offices sized between 93 sq m (1,000 sq ft) to 186 sq m (2,000 sq ft) fell to AED 840 per sq m (AED 78 per sq ft)

• Abu Dhabi main island commanded lease rates which averaged at AED 850 per sq m (AED 79 per sq ft) while average office rents in -7.3% 2.8% Al Reem Island stood at AED 786 per sq m Last 6 Months Last Quarter (AED 73 per sq ft)

• The average occupancy among buildings within the city’s central business districts stood at 79%

Source: REIDIN, ValuStrat

www.valustrat.com | 6 Retail Supply

• The Galleria expansion was Abu Dhabi City Retail Malls and opened boasting an estimated 23,226 sq m Shopping Centres 720 (250,000 sq ft) GLA, with 250 shops, 70 dining (‘000 sq m GLA) options and 21-screen cinema complex

• Mall launched its new Zeal Entertainment Centre with 3,252 sq m (35,000 112 sq ft) GLA dedicated for computer gaming and related activities

• Construction contract for North Riyadh City's (formerly known as Wathba North/South Samkha) Retail Strip Mall has been awarded 43 by Modon Properties, due to complete in August 2020 and will house 7 restaurants, 14 retail outlets and a supermarket spread across an area of approximately 8,687 sq m (93,506 sq ft) GLA

• A revamped and newly improved World Trade 7 70 184 674 599 Centre (WTC) Abu Dhabi retail area was revealed showcasing a modern hypermarket Convenience Neighbourhood Community Regional Super Regional (< 3k sq m) (3k-10k sq m) (10k-30k sq m) (30k-90k sq m) (> 90k sq m) concept and renovated shop design, dispersed on an estimated area of 18,170 sq m (195,580 Retail Completed sq ft) GLA Retail Under Construction Source: REIDIN, MEED Projects, ValuStrat

Retail Performance

• Aldar’s retail assets overall occupancy stood Number of Malls and Shopping Centres at 90%, up 3% QoQ as per latest report in Abu Dhabi City • Amazon introduced its global Prime Day sale for the first time in the UAE, preceding the earlier launch of Prime membership 2 2 3 • Transactions through online shopping could reach AED 59 billion in 2019 and is expected to experience yearly growth rate of 23%

• Footfall during the first four days of operation of The Galleria Al Maryah Island reached 400,000 visitors 3 10 12 12 4

Convenience Neighbourhood Community Regional Super Regional (< 3k sq m) (3k-10k sq m) (10k-30k sq m) (30k-90k sq m) (> 90k sq m)

Retail Completed Retail Under Construction Source: REIDIN, MEED Projects, ValuStrat

7 | Abu Dhabi Real Estate Market 3rd Quarter 2019 Review Hotel Supply

• Latest June 2019 data from Department of Abu Dhabi City Hotel Room Supply Culture and Tourism, Abu Dhabi City had a 2016-2020 total stock of 29,300 keys within a mix of 138 (’000 KEYS) hospitality establishments 1.6

• There were no notable openings or project 0.4 announcements during Q3

• Abu Dhabi Island currently has thirty-five 5-star hotels (11,057 rooms), twenty-three 4-star hotels (4,871 keys), twenty-two 1 to 30 3-star hotels (2,689 rooms) and thirty-nine 29 hotel apartments (4,884 keys) 29 27 27

• Saadiyat Island has a collection of six 5-star hotels with 1,755 rooms. Yas Island composed of one 5-star hotel (499 keys), three 4-star 2016 2017 2018 2019E 2020E hotels (1,133 rooms), two 1 to 3-star hotels (463 keys) and one hotel apartment (164 Hotel & Hotel Apt Rooms New Supply rooms) Source: DCTAD, MEED Projects, ValuStrat

Hotel Performance

• Total international hotel guests in Abu Dhabi Source of Abu Dhabi City Visitors by Nationality City YTD June 2019 grew 2.5% and stood at Apr-Jun 2019 2,176,538 • Average occupancy rate remained relatively stable at 74%, dipping 0.4% from the previous year • The Average Room Rate (ARR) and Revenue Per 41% 28% Available Room (RevPAR) jumped 10.9% YoY to AED 374 and 10.5% YoY to AED 276, respectively • Local tourists comprised 28% of total visitors in the city and remained as the top source market, followed by Indians at 9%, Chinese at 8% and British tourists at 6% • Department of Culture and Tourism Abu Dhabi 8% announced AED 600 million budget to help boost entertainment and events sector 9% 4% • A new landmark development in Saadiyat Island 4% 6% will be built as part of the UAE’s vision of tolerance and hospitality called The Abrahamic Family House which will be a place of worship UAE United States for Christians, Jews and Muslims China Philippines India Others United Kingdom

Source: DCTAD

www.valustrat.com | 8 Industrial Investment/Supply

• The China – UAE Industrial Capacity Industrial Prices Cooperation Demonstration Project has so far (AED/sq m) attracted 20 Chinese companies pumping investments worth AED 6.2 billion in Abu Dhabi (KIZAD) 5,000 4,306 4,306 • Total estimated net project value of 4,000 completed or under construction industrial 3,000 projects for 2019 reached AED 7.1 billion 1,938 1,615 2,000

• Available data on expected supply of 1,000 industrial facilities stood at 104,867 (1.13 million sq ft) BUA for 2019 ICAD • These include light industrial units and Price High Price Low warehouses in KIZAD with 50,250 sq m (540,886 sq ft) BUA and Khazna Data Centre Source: ValuStrat with 31,000 sq m (333,681 sq ft) BUA

Industrial Performance

• Industrial property prices remained relatively • Quarterly rental rates remained relatively stable on a quarterly basis, with some new stable with marginal higher asking rentals built facilities with modern specifications observed for newly built modern specification commanding higher pricing. However we facilities in Mussafah industrial areas observed declines for older properties located in Mussafah • Asking rents quoted generally ranged between AED 194 to AED 592 per sq m per • Prices generally ranged between AED 1,615 annum (AED 18 to AED 55 per sq ft per per sq m to AED 4,306 per sq m (AED 150 per annum) depending on factors such as sq ft to AED 400 per sq ft) in established industrial-grade specifications, quality, age, industrial areas with high specification/quality condition and size of the industrial facility with built, and modern cold storage facilities slightly higher rates for facilities having priced at the upper end and older properties provisions for cold stores. Quarterly increases at the lower end in quoted rents were observed in Mussafah for new built facilities

Industrial Rental Rates 592 (AED/sq m)

452 450 431

215 215 183 194

Rent High Rent Low Al Mina Al Mafraq ICAD Mussafah Source: ValuStrat

9 | Abu Dhabi Real Estate Market 3rd Quarter 2019 Review Valustrat In Media

5th September, 2019 17th July, 2019 UAE- Real estate shows signs of UAE property: Abu Dhabi tenants happy recovery to negotiate as residential rents soften In a declining market rent to own may be a good option Abu Dhabi city is increasingly becoming more for vendors to generate revenue stream from unsold affordable, and with the recently announced freehold stock, however, for the buyer, it means paying rent plus law, investing in Abu Dhabi real estate has become a premium with the option to own the property. “These more attractive. This is at a time when prices and rents premiums could make or break the deal for the buyer. can be further negotiated. Investors can also expect In a growing market, rent-to-own concept offers ‘try relatively high yields and tenants have the upper hand before you buy’ option with an agreed total price, while to upscale their rental property,” said Haider Tuaima, buyers get the flexibility, vendors may feel they could Head of Real Estate Research at ValuStrat. sell for higher prices as the market grows,” said Haider Tuaima, Head of Real Estate Research at ValuStrat.

17th July, 2019

22nd July, 2019 UAE realty set to stabilise Abu Dhabi ‘increasingly affordable’ as Leading consulting firm ValuStrat reported that the second quarter ValuStrat Price Index (VPI) for prices fall 13% residential properties in displayed an overall 11.5 Residential property prices in Abu Dhabi are more than per cent annual fall in capital values, with quarterly 13 per cent lower than a year ago, according to new declines decelerating to 2.9 per cent. “This downward research from leading property consulting agency trend resulted in 29.3 per cent citywide capital value ValuStrat. loss since the peaks of mid-2014. All established freehold locations monitored by the VPI witnessed price drops since the last quarter, ranging from 1.2 per cent to 4.2 per cent,” said the report.

22nd July, 2019 3rd July, 2019 Declan King talks to Business Breakfast UAE mortgage applications up by nearly – Dubai Eye about Abu Dhabi’s Property 80 per cent Market Data from leading real estate firm ValuStrat finds in Declan King, Managing Director & Group Head – Real Abu Dhabi, sales values were on average 12.2 per cent Estate at ValuStrat discusses the impact of declining lower than the same quarter last year and rents were property prices in the capital. down by 6.9 per cent year-on-year.

www.valustrat.com | 10 About

ValuStrat is a leading consulting firm headquartered in Dubai providing Advisory, Valuations, Research, Industrial Consulting and Due Diligence services across a diverse range of industry sectors since 1977. Offices in Strategic the UAE, UK, Saudi Arabia, Pakistan and Qatar serve over 1,000 corporate Partners of clients in the Middle East. Client base includes financial institutions, local corporates, multinationals, governments, SMEs, family businesses and startups. Some of the key sectors serviced by ValuStrat’s consulting team include real estate, hospitality, healthcare, education, manufacturing, retail, Financial Institutions entertainment, transport and FMCG. ValuStrat is a Royal Institution of Chartered Surveyors (RICS) Regulated Firm and the first company head quartered in all of MENA and Asia to be accepted into the prestigious RICS Tech Affiliate program.

VPI ValuStrat Price Index

VPI Online www.valustrat.com/vpi

About the ValuStrat Price Index The ValuStrat Pricet Index for Abu Dhabi’s residential capital values is a valuation-based index constructed to represent the quarterly price change experienced by typical residential units within Abu Dhabi City. The ValuStrat Price Index for Abu Dhabi’s residential rental values is constructed to represent the quarterly rental change experienced by typical residential units within Abu Dhabi City. The VPI applies weighted averages using data samples representing more than 90% of all property types across the city’s investment zones and is built by our expert RICS Registered Valuers. Research Methodology Every effort has been made to ensure the accuracy of this document. New supply data covers 24 defined areas in Abu Dhabi City including non-freehold investment areas. Only completed and under construction projects are included. The Director - Commercial Valuations new supply data does not include announced projects and projects in design phase. The new supply database does not take into account most private building projects. Both the price and rental data are calculated and derived from carefully chosen listings that have been properly cleansed to exclude duplicates and outliers within predetermined areas and districts for office and residential properties Copyright © ValuStrat Consulting FZCo. 2019 This document is the property of ValuStrat Consulting FZCo and must not be reproduced or transmitted in any form or by any means, without the prior written consent of ValuStrat Consulting FZCo. We welcome your constructive feedback and any corrections that may need to be made to this Associate Director & Head of Industrial Consulting document. ValuStrat Consulting FZCo does not accept any liability in negligence or otherwise for any damage suffered by any party resulting from reliance on this document.